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Friday, December 24, 2010

Timeshare Holidays or Con Shops???

You are busy at your work, you get a call from smart, polite and aggressive telemarketer lady saying that your name has been selected for a free gift. Most of us by now know that nothing comes free, but its human psychology to get attracted to known perils by mention of the words ‘free’,’ gift’ etc that is exploited. You have to go along with wife else you are not allowed. Idea is to catch you and get your money commitment then and there as these people know that if you take time to think, you will not fall for their gimmicks. All this is known, but still you go there and worst buy what they force you to. Welcome to club of deceit, false promises, and waste of your hard earned money: Timeshare holidays

Con is fully on. These people invite more gullible people to sell concept without bothering about promises made to existing customers. Existing customers don’t get bookings when they need. That’s their problem and concept of vacation when you want does not exist. That is because of greed to add new onetime paying customers without expanding capacity to satisfy existing customers. This results this entire segment to be a con shop
There are also dubious players in this field who promise everything under moon (except maybe vacation or land on moon). The case of Sterling resorts and Suman Motels is fresh among minds of readers where lakhs of investors we re duped. Lets study the most respected club with a leading industry brand name offering time share holidays who also promote with ads across media.

Even from individual point of view the concept does not sell in itself

Here is the concept they sell.

Basic Fees for Red season (second best season time)

Rs. 4.37L for 1 BR,

Studio - Rs.3.45L,

2BR - Rs. 7.67L

(One time payment has 5% discount or 12-month EMI @ 0%).

Annual fee ~Rs. 11K

RCI - Free for first 2 years, then ~Rs. 2K/year

~~One gets a 1BR (575-650 s.ft.) for 7 days/year. Can be exchanged for 2 studios effectively extend it to 14 days/year. The total period is for 25 years.

~~Current offer of A free Sony 32" Bravia LCD TV (This varies)

~~They have wait period of 5 months before one can use their services. They are giving 4N/5D immediately on signing to adjust for the wait period.

~~ additional 7 days for any international destination (effectively making 1 yr free, so 26 yrs).

~~Standard things like carryover, transfer, sale are allowed

In short that the club membership costs between 2 and 7 lakhs including taxes. Additionally, one pays Rs. 7,500 to Rs. 14,000 on annual fees, regardless of whether they take holidays. Overall, this is not very exciting to someone who isn't bowled over by their presentation.

• At 2.5 lakhs, at a savings rate of 8% a year (using P.O. deposit rates) you're actually paying Rs. 20,000 a year. Plus, the 7,500 annual fees adds up to Rs. 27,500. For a week, that's about 4,000 per day. At the Rs. 2.5 lakh studio room membership, you are unlikely to get peak season bookings. For what it's worth, you will pay Rs. 3,000 to Rs. 4,500 per day for most of these resorts if you book externally - all of them are available for "non-members".

• (Don't consider that you lose the entire 2.5 lakhs at the end of 25 years- otherwise you'd have to do a complex reducing balance calculation)

• You hope that you will get the rooms when you want, in the place that you want, and in the hotel of your choice. If they have no rooms available during your kids vacations (surprise!), bad luck, try next year. Costs escalate when you consider this. Says

• Given that you're paying upfront, you are unlikely to get top service - after all service comes with the expectancy of repeat business, of a payout at the end. When you have committed to repeat business, and have already paid, what are the chances you'll be treated as well as, say, a walk-in visitor who's booked as a "non-member"? The incentives don't quite work in your favour.

• If you decide, at any time, to use your vacation at a non-Club- place for a particular year, you are paying Rs. 4,000 more per day from the already sunk cost. They'll probably tell you that your days can be sold, but in practise this is extremely cumbersome.

• Holidaying has been inflation proof for the most part, in the last few years, all things considered. Goa still costs the same for 3 and 4 star resorts as it used to in 2005, in fact you could get hotels at lesser. Even if you consider that average rates were around Rs. 2000 per night in 1999 and are about Rs. 4000 now, that's a 7% CAGR - just about meeting inflation. At the increase of holiday opportunities - you could holiday cheaper in Bangkok, Malaysia or Dubai - and the increase in number of resorts, one can expect that the next ten years will not see huge price increases.

To simplify: If you get 4.37L membership with 11k +2k annual renewal thats not a good deal IMO. 10% return on 4.37 will give you nearly 43k, you add 13k to it and distribute 4.37L over 25yrs and you have nearly 77k to spend on hotels for 7days. That is nearly 11k per night in a hotel room. That is too expensive IMO. If you don't go one year then you lose it, so your next vacation is twice as much.

Apart from above points what are the negatives

How do people like their service?

Cityblog has only heard of people being dissatisfied. From members who couldn't get any rooms when they wanted, to others who couldn't get refunds, or even get anyone to answer their call, nearly all responses were negative. The only positives we got were for individual resorts, but like a friend said "You will get that even if you book as a non-member".

We at Cityblog tried to investigate. One of the staff members who is a member inquired about availability of premium Goa property for Nov. He was informed that there is no vacancy till jan.On same date a call was made from non member, he initially was told that its full. But there was a reply next week that due to cancellation bookings are available.

Currently scheme has been sold to a sizable population of India. Every day significant members must be added from all over India based on sales calls made by team and the aggressive marketing we already know about. “Where is the capacity added? “Asks Rajesh Tukdeo a member of this leading club. “They should stop selling new memberships as it it at the cost of existing members. I tried book many times without success. It seems like my money is waste as I have to do holidaying when I have time and space.”

Let's also look at published (negative) opinions on the service or lack thereof:

• Mouthshut reviews are all negative, with literally no supporters for the service.

• Consumer complaints have a significant number of negative views on the service.

• A court recently asked it to refund the membership to a consumer.

Positive stuff: We could only find some positive reviews on the individual resorts.

If you're looking to buy or sell your membership check out web with an excel sheet of sellers and prices listed - list your membership there for selling, and if you're looking to buy you can get much better deals here.

Other questions one should have answers before investing in Timeshare

1. Are the properties good?

All properties are not same, most of their rooms are in 5-6 big resorts, rest other are small and do not match quality of those big resorts.

2. How easy is it to book? Are everything always full or reservations can be obtained easily?

It is generally the case that people who own timeshares have to justify their vacation rather than enjoying it. General survey states no one gets holiday when they want or they have to book well in advance which is not possible for many.

3. Do we need like 4-5 months in advance or 1-2 months okay to book?

If you want to book for Sep you can plan 1-2 month in advance but for Oct-Nov 3-5 month and for December more then 4 month in advance booking will be required.

4. Is it worth the cost?

Depends! (what factors matter you most?)

5. Are additional costs (restaurant, concierge, etc.) a ripoff or par for the facilities?

You get accommodation only, every thing else come at price

Buffet for a day for a family (2 adult + 2 Children) will cost you 2000/+, resorts are far away from city, so you will not find other good options to eat/shop nearby.

6. Are there any hidden costs?

Except for accommodation you have to pay for every thing. You may also have to pay municipal tax which varies resort to resort.

~~One gets a 1BR (575-650 s.ft.) for 7 days/year. Can be exchanged for 2 studios effectively extend it to 14 days/year. The total period is for 25 years.

These resort does not cover historical and religious place. Some time you may be planning for those places also. So a RED-studio is always enough. Can you really use 14 days .. every year.

~~A free Sony 32" Bravia LCD TV is the current offer.

These offer are available year around, only items get changed. So ideally you are getting part of your own money back.

~~They have wait period of 5 months before one can use their services. They are giving 4N/5D immediately on signing to adjust for the wait period.

~~ additional 7 days for any international destination (effectively making 1 yr free, so 26 yrs).

Get Terms and condition and offer promise in written.

To conclude, its your hard earned money. Preserve it and don’t get conned by hard marketing and lure…

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